Airport UDF to Fund KIA’s Growth

Air passengers expecting relief from User Development Fee (UDF) levied by the Kempegowda International Airport (KIA) could be disappointed if the state government’s request to maintain status quo is accepted. At the consultation organised by the Airports Economic Regulatory Authority of India (AERA), the government had contended that tariff reduction at this stage would adversely affect KIA’s future expansion and growth. AERA had excluded forthcoming airport projects worth 1,212 crore while considering the capital expenditure for determination of aeronautical tariff. It cited the expenditures on the Eastern tunnel, a third entry proposed for the KIA, a 220kV substation and terminal upgrades. “The excess revenue collected can be trued up in the next control period and will smoothen the higher tariffs that are expected in the third control period due to higher capitalisation,” it submitted. This would also mitigate tariff spikes and shocks, it said. “It may be now difficult for further equity infusion and therefore, the expansion projects have to be completed through external borrowings and augmented revenue.” The Airline Operators Committee (AOC), Bengaluru echoed the government’s position, contending that airlines are in constant need of additional infrastructure and upscaling of facilities. Citing the KIA’s doubledigit passenger growth, the AOC noted “The situation is actually worrisome with average holding time of up to 20 minutes.” Urban mobility analyst Sanjeev Dyamannavar submitted that even after getting 4,000 acres of land from the government, the BIAL management had not come up with any real estate plans to generate sufficient income. Once the airport metro line opens, he wants all passengers travelling on it to be levied a premium service charge to reduce UDF burden.